Range Fuels, the failed U.S. cellulosic ethanol company, sold its only factory this week to LanzaTech for $5.1 million under a government-approved liquidation. That's one hell of a deal, considering the failed wood-to-ethanol company received tens of millions in federal loan guarantees and grants to build a factory that never produced a single drop of the next-gen fuel.

Here's an eyebrow-raising twist in the deal. LanzaTech, like Range Fuels, is backed by investment company Khosla Ventures. Billionaire Vinod Khosla, who is known for investing in so-called black swan ideas and innovation that could disrupt markets, also sits on the LanzaTech board.

Range Fuels announced its foreclosure last month. But really, the company was finished in early 2011. Several years ago, Range Fuels attracted attention (and money) from the federal government and private investors.

Under the Bush Administration, the Agriculture Department announced an $80 million loan guarantee for the wood-to-ethanol factory project. The Bush-led Energy Department offered a $76 million grant for the plant.

Range ended up receiving $46.3 million of the grant and $42 million of the guarantee loan, reported Bloomberg. Private investors poured upwards of $160 million into the project and the state of Georgia, where the plant is located, pledged $6.2 million. Treutlen County in Georgia offered 20 years worth of tax abatements and 97 acres in its industrial park, reported the Atlanta Journal Constitution.

What went wrong with Range Fuels? Blogger Robert Rapier warned back in 2010 and debunked Range Fuels claims long before mainstream media took notice. Last month, Rapier took a look back at the Range Fuels failure, which I suggest you check out, and offered up several explanations, including the lack of due diligence from the government and the company's attempt to build a factory with many new pieces of unproven technology.

More on LanzaTech

The company, founded in 2005, is developing technology to use microbes to convert industrial gases, specifically carbon monoxide, into ethanol and other drop-in fuels. The company recently received a $3 million contract from the U.S. Federal Aviation Administration for an alcohol-to-jet fuel project. The company signed last November its first commercial customer -- Concord Enviro Systems in India -- to use its technology to produce power and fuels from municipal solid waste syngas.

Kirsten Korosec has written for Technology Review, Marketing News, The Hill, BNET and Bloomberg News. She holds a degree from Northwestern University's Medill School of Journalism. She is based in Tucson, Arizona.
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